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The global organic food and beverages industry

“Coronavirus hit 6.8 Mn lives with death tolls 397,000 globally.”

“The US’s coronavirus death toll surpasses 127,000.”

“India’s coronavirus lockdown leaves thousands of people stranded and hungry.”

In the past year, such headlines were the first thing we interacted with. Being separated from our friends, families, all of us waited hopelessly for the day when we could go back to the streets and roam freely, without the fear of contracting the deadly virus. Another major thing that this virus brought along with it was how it crashed the global economy and impacted every industry.

This article will shed light on one specific industry, highlighting its developments, segmentations, scope of improvement or growth, its market share in the past year, and the impact of covid on the industry.

The global organic food and beverages market

What are organic food and beverages?

  • Organic food and beverages consist of those natural and organic ingredients that are cultivated in compliance with the organic farming standards. Although these standards vary worldwide, in general, these farming practice features which strive to promote ecological balance, conserve biodiversity, and recycle resources.

  • Organic food products also prohibit the use of synthetic chemicals such as pesticides and fertilizers and are rich in vitamins like magnesium, iron, vitamins, and a host of other minerals.

  • In general, they are usually not processed using industrial solvents or synthetic food additives.

  • Organic food and beverages are also rich in antioxidants which help in improving the overall health of the consumer.

  • In general, smaller-scale organic farming is beneficial to the environment, as it uses on-farm inputs, such as fertilizers which are derived from compost created on-site.

If we consider the report by Market Analysis and Insights: Global and United States Organic Foods and Beverages Market, we will witness that the demand for organic food and beverages has increased globally. The report also included the statistics that in 2020, the market size was USD 115650 million. With an increase in demand, it is expected to reach USD 232080 million by the end of 2027, with a Compound Annual Growth Rate of 10.0% during the forecast period 2021-2027. Therefore, the question arises, what are the factors responsible for the growth of the global organic food industry?

  • Change in purchasing behavior of consumers- driven by the demand for clean label products, consumers are now keen to gain knowledge about the ingredients used in the products and at what level? This interest in scrutinizing the ingredients present in food items has increased the sales of organic foods and beverages which are labeled as clean label products.

  • Health-conscious consumers- people are now prioritizing their health more than ever. As a result, manufacturers are focusing on introducing natural fruit ingredients that contain no added sugar in their beverages or food products.

  • Preference for natural ingredients over price levels - despite the price difference, consumers prefer food products that are naturally made, instead of those which contain synthetic and chemical ingredients.

  • Increase in the number of diet centers - the number of diet centers has increased significantly, which propagates the use of organic food and beverages to improve physical fitness and health. As a result, market sales have increased significantly.

What factors hinder the growth of the market?

  • The high price of organic foods - The cost of organic food is higher than that of conventional food because of the costly input it requires, added the labor cost. This intensive management and labor are frequently expensive than routines used on conventional farms.

  • Risk and threat of pests - pests and disease-causing agents are the main reason due to which organic crops get destroyed. Due to less advancement in technology, about 1/4th of organic food gets destroyed every year due to pests. This calls for an immediate need to introduce natural and chemical-free repellents in the field.

  • Shorter shelf-life-as as these food items are chemical-free, their shelf-life is less, posing a problem in its smooth and efficient transportation. To avoid this, it is essential to have an efficient transportation system, which will avoid farmers from any loss.

The global organic food and beverages market is segmented based on product type and geography.

1. By product type, the market is segmented into organic foods and organic beverages. The organic food segment is further divided into organic fruits and vegetables, organic meat, fish & poultry, organic dairy products, organic frozen & processed foods, and other organic foods. The organic beverage segment is divided into organic non - dairy beverages, organic coffee & tea, organic beer & wine, and other organic beverages.

Presently, organic coffee and tea have witnessed higher demand potential. This segment has a high rate of adoption in the organic food and beverages market due to unique advantages provided by organic coffee and tea such as helping in weight loss.

Organic fruits and vegetables registered the highest organic food and beverages market share. In 2020, this segment registered a market share of 38%. The main reason for this was due to the rising inclination of the consumers to consume only those products which came directly from the farm and do not use any chemicals. The rapid growth of demand for fresh and healthy foods is expected to increase the growth rate in near future.

The advent of covid has brought an increase in the adoption of organic groceries, organic baby foods and has made the organic food segment one of the lucrative targets for investment. Apart from these other segments such as organic non-dairy products, organic dairy products, and organic meat, fish & poultry products have also witnessed appreciable growth. Organic non-dairy products held a market share of 35% in 2020. The main reason for this was the increasing adoption of vegan culture and the low-fat content present in non-dairy products.

2. Based on geography, the organic food and beverages market has been segmented into North America, Europe, Asia Pacific, and LAMEA (Latin America, Middle East, and Africa).

North America held the largest market share, in 2020, at 39%, and is expected to continue this market dominance through 2022. Apart from this, the Asia Pacific market will witness significant growth due to an increase in the disposable income of the consumers and large exports from regions of North America and Europe. The Asia -Pacific organic dairy products market is expected to rise at a Compound Annual Growth Rate of 16.3%.

Future of the global organic food industry

1) The global organic foods and beverages industry is built on four pillars. These are-

  • INCLUSIVITY- bringing together all the actors in the food industry, especially smallholders, women, and youth to ensure effective economic and social inclusion.

  • EFFICIENCY- an efficient food system is, one that meets the global demand for food, while at the same time focusing on reducing post-harvest loss.

  • NUTRITION- highly nutritious food is imperative for the overall well-being of humanity. Organic foods and beverages fulfill this requirement; hence we should adopt policies to indulge more people to take up this practice.

  • SUSTAINABILITY- it is important to have facilities that enable the conservation of the food system. As organic foods have a shorter shelf life, importance should be laid on, how we can construct an easy transportation system to deliver these products to their required destination on time, while reducing the negative impact on the environment.

2) As we earlier discussed the pillars of the food industry, we also need to focus on incorporating them. Though we know, the practice of organic farming is huge, we will need the involvement of government, technocrats, agro-crats, to address the challenges and make the most of opportunities in the most systematic manner.

3) Increasing development in R&D will open a lot of opportunities for the development of the organic food market. There is a lot of pressure on producers to make their food healthier, long-lasting and cheaper, which may come in the form of consumers, regulators, or other sources. Hence, there is always a need to innovate. When you go to a supermarket, you may see shelf after shelf, mimicking the marketing gimmick: new and improved, 25% off, organic. Behind this pack of advertising, is a team of marketing that is backed by a myriad of drivers that stimulate the R&D of the organic food and beverage industry. R&D is incorporated in a sector to make food,

  • More sustainable

  • Quicker to produce or to chill

  • Increase its shelf-life

  • Make food healthier

  • Make the process more efficient

Case study: Indian organic food and beverage market

At the beginning of 2020, the Indian organic food and beverages market projected growth from USD177.14 million to USD553.87 million in 2026. The major factors which contributed to this growth were,

  • Online availability of organic food and products.

  • Change in consumers’ preference.

  • Increase in land-area under organic food cultivation.

  • Expanding marketing and distribution channels.

  • Increase in awareness among people, regarding health concerned issues.

During COVID-19, there was a shortage of workers working in the organic food industry, which resulted due to the lockdown. As a result, organic food processing companies were unable to gather sufficient workers for processing products. As vendors' stores were closed, farmers faced difficulties in ordering agricultural inputs. But all this did not stop the increase in demand for organic food, as it was observed, people are now preferring organic food products in comparison with inorganic products. This shift in consumers post lockdown, towards preventive health management practices is fuelling the growth of the market and is expected to drive the market of organic food in the future as well.

The organic food and vegetable segment dominated the industry in the historical period and is anticipated to continue this dominance through FY2026. Also, there has been a significant increase in certified land under organic farming from 1.08-million-hectare in 2009-10 to 5.21-million-hectare in2012-13.

The major organic food-producing states in India include Maharashtra, Karnataka, Uttar Pradesh, and Andhra Pradesh.

Some of the major players operating in the Indian organic food and beverages market are-

  • Suminter India Organics Private Limited

  • Nature Bio-Foods Limited, Organic India Private Limited

  • Sresta Natural Bioproducts Pvt. Ltd.

  • Phalada Agro Research Foundations Pvt. Ltd.

  • Mehrotra Consumer Products Pvt. Ltd.

  • Morarka Organic Foods Pvt., Ltd.

  • Nature Pearls Pvt Ltd.

  • Conscious Food Private Limited

  • Nourish Organics Foods Pvt. Ltd.

Since the coronavirus struck people's life, everyone has turned health conscious. From practicing yoga to eating chemical-free food items, people are adopting new lifestyles. This has been the main reason, the organic food market has seen immense growth, and will continue to do so.




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